For nearly 20 years, BNP Paribas Wealth Management has steered rising global wealth into private markets.
In fact, the firm raised more than $1.3 billion of capital from its high-net-worth clients last year – one of its best years for inflows – as demand for private equity showed no signs of slowing down.
BNP Paribas Wealth Management was one of the first private banks in Europe and was a pioneer in giving access to private markets to its HNW clients, for a minimum ticket of €250,000. The firm had €422 billion in assets under management as of end-December 2021 and serves a clientele of wealthy individuals, shareholder families and entrepreneurs in Europe, US, Asia and the Middle East.
The firm invests across private equity, real estate, private debt and infrastructure. Within PE, it has backed dozens of GPs in buyout, growth and secondaries funds.
Key to unlocking private wealth allocations is finding the right balance between liquid and private assets based on clients’ risk profiles, Claire Roborel de Climens, BNP Paribas WM’s global head of private and alternative investments, told Private Equity International.
“Our intention is to accompany our clients and to diversify their private assets pocket,” the 18-year veteran at the firm added.
Here’s more from Roborel de Climens on how the firm’s wealthy clients are deploying capital in a highly uncertain time.
GPs are coming back to market faster with much larger funds – how is this market dynamic being discussed amongst your client base?
GPs are deploying quickly, so they raise their successor funds only after two or three years instead of the usual four to five. For us, it could be a challenge to distribute the successor fund if the previous one has not yet distributed to our clients. So, sometimes we don’t back one vintage and come back for the next one instead, because it’s better if our clients have received proceeds.
When I started [at BNP Paribas WM] in 2004, it was very tough to get access to private equity funds, which were reserved for institutional investors and not used to [working] with private banks. I had even been in situations where the GPs did due diligence on us. Back then, I really had to pitch and to convince them that HNW individuals are loyal, long-term investors.
Today, it’s a completely different paradigm. I’ve seen a real change over the last two to three years: now GPs are knocking at our door. “We want to work with you. We want to diversify our investor base,” they say. The global wealth market is expected to grow 5 percent per year by 2025, and GPs see that there is a huge potential to address.
What are your HNW clients most worried about?
Valuations. That’s why fund manager selection is important.
As you know, in the PE industry, you can have a huge dispersion between the top-quartile and bottom-quartile funds. That’s why they really rely on our selection process. It is crucial to work with best-in-class PE firms with strong operational capabilities and sector expertise that create value in the companies they invest in.
Returns will not come from financial engineering and leverage but from the company’s EBITDA growth. PE is well positioned to seize attractive investment opportunities created by this current environment.
Is there an alternatives strategy that’s currently garnering more interest from your HNW clients?
We see more clients interested in private assets funds since we are in a low interest rate environment. We’ve seen a growing appetite from clients because they are looking for high returns and portfolio diversification and they want to contribute to the financing of the real economy.
Many of our clients are entrepreneurs, so private equity is in their DNA. In fact, they’re already doing private equity. They don’t know [it], but they do so because they own the shares of their private company.
What’s new for them is to invest in closed-end funds. That’s the kind of exposure we bring to them – more diversification in sectors, strategies and geographies.
Could fundraising platforms supplant private wealth banks in the future?
Fundraising platforms offer convenience and access. They are complementary to what private banks offer, which is a bespoke and personalised approach with our clients, that is adapted to their risk profile. We also have very deep knowledge of our clients and their personal wishes.
We are able to advise them on their portfolio allocation and on the diversification of the illiquid pocket according to their personal goals. We have an holistic view on our clients’ wealth and accompany them to build the PE portfolio adapted to their profile and needs.
Which parts of the business do you plan to build out in the near term?
We would like to offer more products and continue to address non-professional clients in Europe. We launched in 2016 a PE product for French life insurance contracts and have continued to do so since. We were also pioneers in 2019 when we launched the first European Long-Term Investment Fund in France and then across Europe. There is a huge potential to develop and expand our offerings to a wider client base.
Within BNP Paribas Wealth Management, we want to continue with good fund selection, and to continue to be cautious and disciplined. We have a long track record in this space, and we need to preserve that for the benefit of our clients. We also want to continue to improve the customer experience and the digitisation of our offerings – that is key to what we do.